In October, the Consumer Price Index (CPI) experienced a year-over-year increase of 2.6%, according to data from the Bureau of Labor Statistics. This rise marks a slight uptick from the 2.4% recorded in September, which was the lowest since Joe Biden took office. Core inflation, excluding food and energy prices, remained steady at 3.3% year-over-year, unchanged from the previous month.
Voter Frustration
The recent election highlighted voters’ frustration with the rising cost of living. Over the past four years, prices have surged by approximately 20%. While average wages have increased more than prices, many households face higher expenses for essential services such as childcare and insurance. This has led to growing dissatisfaction among consumers.
Rising Prices for Used Cars and Travel
Analysts have pointed out the increase in used car prices and travel services, possibly influenced by hurricanes that impacted the Southeast. Despite these increases, the economy continues to show signs of strength. Employers are still hiring, and retail sales have risen, indicating that consumers are willing to spend.
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Economic Expectations Under New Administration
As Donald Trump prepares to assume the presidency again, economic expectations remain uncertain. Polls indicate that many voters long for the economic stability experienced during Trump’s first term. However, economists warn that proposed policies could worsen inflation if implemented.
Market Reaction and Interest Rates
Last week, investors began selling government bonds amid concerns that Trump’s economic proposals might trigger another wave of price increases. This sell-off has resulted in higher borrowing costs, including mortgage rates, despite ongoing efforts by the Federal Reserve to reduce interest rates. Jerome Powell, the Fed Chair, warned of potential “bumps” on the path to achieving the central bank’s 2% inflation target.
Moderate Inflation in Other Sectors
Despite widespread price increases in certain products, some prices have remained relatively stable. For instance, gasoline prices are about 30 cents lower than last year. Additionally, a recent report indicated a significant drop in online food prices over the past year.
Future Outlook
Not all economists believe inflation will surge under the new administration, and some business leaders doubt Trump’s ability to implement his proposals effectively. However, some are already preparing for potential changes based on past experiences with his economic policies.
Estimates regarding consumer costs from proposed tariffs vary widely among analysts. Some predict increases ranging from $7,600 per U.S. household to $1,700 for middle-income households.Citi analysts suggest that tariff-related cost increases might lead to a one-time price rise of up to 2% across the economy but caution that this outcome is not guaranteed. “While policies like tariffs might result in months of heightened inflation, the overall scale and timing of their impact remain highly uncertain,” analysts noted this week.
